Case 1:08-cr Document 306 Filed 04/14/10 Page 1 of 91 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

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1 Case 1:08-cr Document 306 Filed 04/14/10 Page 1 of 91 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION UNITED STATES OF AMERICA ) ) No. 08 CR 888 v. ) Judge James B. Zagel ) ROD BLAGOJEVICH and ) ROBERT BLAGOJEVICH ) GOVERNMENT S EVIDENTIARY PROFFER SUPPORTING THE ADMISSIBILITY OF CO-CONSPIRATOR STATEMENTS The UNITED STATES OF AMERICA, by its attorney, PATRICK J. FITZGERALD, United States Attorney for the Northern District of Illinois, respectfully submits this written proffer, pursuant to the provisions of Federal Rule of Evidence ( Rule ) 801, including Rule 801(d)(2)(E), and United States v. Santiago, 582 F.2d 1128 (7 th Cir. 1987), of the government s evidence supporting the admission of certain co-conspirator statements at trial. This proffer begins by discussing case law governing the admissibility of co-conspirator statements under Rule 801(d)(2)(E), and, alternatively, other provisions of Rule 801(d)(2). Next, this proffer summarizes some of the evidence supporting the admission of co-conspirator statements. In this manner, the government will establish to the Court the existence of the evidence available to complete the necessary foundation at trial, the roles of certain witnesses, and the bases for admission. The government is not detailing all of its evidence that would go to show the existence of the pertinent conspiracies, or all of the co-conspirator statements that were made in furtherance of the conspiracies charged in the indictment. Rather, this proffer highlights for the Court samples of the government s evidence in order to establish to the Court the existence of the conspiracies described in Counts Two, Seventeen, Eighteen, Twenty-One, and Twenty-Three, and the scheme

2 Case 1:08-cr Document 306 Filed 04/14/10 Page 2 of 91 described in Counts Three through Thirteen, and the roles of the various conspirators. 1/ Thus, this proffer does not list all of the government s witnesses and the evidence each will present, nor does it provide all of the evidence that will be presented by those witnesses who are named. Finally, by presenting statements attributed to particular witnesses, the government is not herein committing to call each of the witnesses for each of the statements attributed. I. OVERVIEW OF THE CHARGED OFFENSES Defendant Rod Blagojevich has been charged with conspiracy to commit racketeering acts, racketeering, mail and wire fraud, attempted extortion, conspiracy to commit extortion, bribery, and conspiracy to commit bribery, while defendant Robert Blagojevich has been charged with wire fraud, conspiracy to commit extortion, attempted extortion, and conspiracy to commit bribery. The Second Superseding indictment charges that the defendants, together with others, used and agreed to use the powers of the Office of the Governor of the State of Illinois, and of certain state boards and commissions subject to influence by the Office of the Governor, to take and cause governmental actions, including: appointments to boards and commissions; the awarding of state business, grants, and investment fund allocations; the enactment of legislation and executive orders; and the appointment of a United States Senator; in order to obtain financial benefits for themselves and others, including campaign contributions for Rod Blagojevich, and employment for Rod Blagojevich and his wife. 1/ There are multiple conspiracies and schemes alleged in the Second Superseding Indictment. The evidence in support of those conspiracies and schemes overlaps significantly, so that, for example, the evidence that supports the existence of the racketeering conspiracy charged in Count Two also supports the existence of the honest services fraud scheme charged in Counts Three through Thirteen. Due to the overlap of this evidence, the government will not make a separate showing for each conspiracy or scheme charged in the Second Superseding Indictment. 2

3 Case 1:08-cr Document 306 Filed 04/14/10 Page 3 of 91 II. THE LAW GOVERNING THE ADMISSIBILITY OF CO-SCHEMERS STATEMENTS Rule 801(d)(2)(E) of the Federal Rules of Evidence provides that a statement is not hearsay if it is offered against a party and is a statement by a co-conspirator of a party during the course and in furtherance of the conspiracy. The admission of a co-conspirator statement against a defendant is proper where the government establishes by a preponderance of evidence that: (1) a conspiracy or scheme existed; (2) the defendant and the declarant were members of that particular conspiracy or scheme; and (3) the statement was made during the course and in furtherance of the conspiracy or scheme. See, e.g., Bourjaily v. United States, 483 U.S. 171, 175 (1987); United States v. Westmoreland, 312 F.3d 302, 309 (7 th Cir. 2002). A. The Santiago Proffer is the Approved Method of Proffering Co-Schemer Statements In this Circuit, the preferred way for the government to makes its preliminary factual showing as to the admissibility of such statements is by filing a pretrial written proffer of the government's evidence. See, e.g., United States v. Hoover, 246 F.3d 1054, 1060 (7 th Cir. 2001); United States v. Irorere, 228 F.3d 816, 824 (7 th Cir. 2000). 2/ In making its preliminary factual determinations, the Court must consider the statements themselves as evidence of a conspiracy and whether the statements the government seeks to admit were made in furtherance of that conspiracy. See United States v. Brookins, 52 F.3d 615, 623 (7 th Cir. 1995); United States v. Maholias, 985 F.2d 869, 877 (7 th Cir. 1993). Indeed, the Court may consider all non-privileged evidence. See United States v. Lindemann, 85 F.3d 1232, 1238 (7 th Cir. 1996). 2/ Accord, e.g.,united States v. Haynie, 179 F.3d 1048, 1050 (7 th Cir.1999); United States v. Rodriguez, 975 F.2d 404, 406 (7 th Cir. 1992). 3

4 Case 1:08-cr Document 306 Filed 04/14/10 Page 4 of 91 B. Co-conspirator Statements Are Admissible as Nonhearsay Despite the Absence of a Formal Conspiracy Charge As noted above, statements may be admitted under Rule 801(d)(2)(E) notwithstanding the lack of any formal conspiracy charge. See, e.g., United States v. Godinez, 110 F.3d 448, 454 (7th Cir. 1997); Santiago, 582 F.2d at / In addition, there is no requirement that each member of the venture share a criminal intent for the co-conspirator rule to apply to statements that members made in furtherance of the conspiracy. These two rules are based on the very nature of the coconspirator doctrine: The distinction should be noted between conspiracy as a crime and the coconspirator exception to the hearsay rule. Conspiracy as a crime comprehends more than mere joint enterprise. It also includes other elements, such as a meeting of the minds, criminal intent and, where required by statute, an overt act.... The coconspirator exception to the hearsay rule, on the other hand, is merely a rule of evidence founded, to some extent, on concepts of agency law. It may be applied in both civil and criminal cases.... Its rationale is the common sense appreciation that a person who has authorized another to speak or to act to some joint end will be held responsible for what is later said or done by his agent, whether in his presence or not. * * * The substantive criminal law of conspiracy, though it obviously overlaps in many areas, simply has no application to this evidentiary principle. Thus, once the existence of a joint venture for an illegal purpose, or for a legal purpose using illegal means, and a statement made in the course of and in furtherance of that venture have been demonstrated by a preponderance of the evidence, it makes no difference whether the declarant or any other partner in crime could actually be tried, convicted and punished for the crime of conspiracy. United States v. Gil, 604 F.2d 546, (7 th Cir. 1979) (citations omitted and emphasis added). 3/ See also, e.g., United States v. Cox, 923 F.2d 519, 526 (7 th Cir. 1991) (conspiracy charge not a condition for admitting statements under Rule 801(d)(2)(E)); accord, United States v. Reynolds, 919 F.2d 435, 439 (7 th Cir. 1990); United States v. Kelley, 864 F.2d 569, 573 (7 th Cir. 1989); United States v. LeFevour, 798 F.2d 977, 983 (7 th Cir. 1986). 4

5 Case 1:08-cr Document 306 Filed 04/14/10 Page 5 of 91 This distinction was explored in United States v. Coe, 718 F.2d 830 (7 th Cir. 1983). In Coe, the court explained that a so-called co-conspirator statement's admissibility does not depend on the substantive law of conspiracy: Conspiracy as an evidentiary rule differs from conspiracy as a crime. The crime of conspiracy comprehends much more than just a joint venture or concerted action, whereas the evidentiary rule of conspiracy is founded on concepts of agency law.... Recognizing this, some courts refer to the coconspirator exception as the joint venture or concert of action exception.... A charge of criminal conspiracy is not a prerequisite for the invocation of this evidentiary rule.... Indeed, it may be invoked in civil as well as criminal cases.... The proposition that the government did have to establish by a preponderance of independent evidence was that [the individuals]... were engaged in a joint venture-- that there was a combination between them.... Coe, 718 F.2d at 835 (citations omitted). 4/ C. The Supreme Court s Crawford Decision Has Not Changed the Admissibility of Co-Conspiracy Statements The Supreme Court s decision in Crawford v. Washington, 541 U.S. 36 (2004), changed much of the law concerning out-of-court testimonial statements, but it did not affect the admissibility of co-conspirator statements. In Crawford, the prosecution introduced a tape-recorded statement made before trial by the defendant s wife to law enforcement. Id. at 38. At trial, however, the wife was unavailable as a witness due to the state s spousal privilege law, and thus the defendant did not have an opportunity to cross-examine her. Id. at 40. The Court ruled that admission of the statement violated the Confrontation Clause, holding that where the government offers an unavailable declarant s hearsay that is testimonial in nature, the Confrontation Clause requires actual 4/ See also Hitchman Coal & Coke Co. v. Mitchell, 245 U.S. 229, 249 (1917) (explaining origin of the co-conspirator rule in the law of partnership: the act or declaration of one, in furtherance of the common object, is the act of all, and is admissible as primary and original evidence against them. ). 5

6 Case 1:08-cr Document 306 Filed 04/14/10 Page 6 of 91 confrontation, that is, cross-examination, regardless of how reliable the statement may be. Id. at As examples of testimonial statements, the Court listed prior testimony at a preliminary hearing, before a grand jury, or at a former trial, and to police interrogations. Id. at 68. The rule in Crawford does not apply, however, to statements that are not hearsay. 5/ Thus, the Seventh Circuit has squarely held that Crawford does not apply to and did not change the law relating to co-conspirator statements. In United States v. Jenkins, 419 F.3d 614 (7 th Cir.), cert. denied, 126 S. Ct. 782 (2005), the Seventh Circuit noted: As to the Confrontation Clause argument, Crawford does not apply. The recordings featured the statements of co-conspirators. These statements, by definition, are not hearsay. Crawford did not change the rules as to the admissibility of co-conspirator statements. 419 F.3d at 618; accord, United States v. Tolliver, 454 F.3d 1160, 1165 (7th Cir. 2006). Because co-conspirator statements are not testimonial hearsay statements, Crawford is not implicated, and those statements may be admitted without offending the Sixth Amendment. D. The Proper Standard for Admissibility Is Preponderance of the Evidence A district court s preliminary determination of admissibility for purposes of Rule 801(d)(2)(E) is distinct from the standard required in determining on appeal whether sufficient evidence exists to uphold a jury verdict. The standard to be applied in the context of admissibility 5/ The rule in Crawford also does not apply where: (1) a statement, though testimonial in nature, is not offered for the truth of the matter asserted, 541 U.S. at 59 n.9; (2) the declarant testifies at trial and is subject to cross-examination regarding the prior statement, id. at 59 n.9; (3) the statement is non-testimonial, id. at 60; or (4) the declarant is unavailable to testify and the defendant had a prior opportunity for cross-examination, id. at 59. Another exception to the confrontation requirement applies where the defendant procured the declarant s unavailability, that is, forfeiture by wrong-doing, see id. at 62; Fed. R. Evid. 804(b)(6). 6

7 Case 1:08-cr Document 306 Filed 04/14/10 Page 7 of 91 under Rule 801(d)(2)(E) is a preponderance-of-the-evidence standard. Lindemann, 85 F.3d at 1238 (citing Bourjaily, 438 U.S. at ). E. Principles for Determining Membership in and Existence of the Criminal Conspiracy 1. The Court May Consider the Proffered Statements Themselves A district court may consider the proffered statements themselves in determining the existence of a conspiracy, and a defendant s participation in it. Bourjaily, 483 U.S. at 180; United States v. de Ortiz, 907 F.2d 629, 633 (7 th Cir. 1990). 2. Both Direct and Circumstantial Evidence Can Be Considered A district court can also consider both direct and circumstantial evidence to determine the existence of a conspiracy. See United States v. Townsend, 924 F.2d 1385, 1390 (7th Cir. 1991); United States v. Patterson, 213 F. Supp. 2d 900, (N.D. Ill. 2002)(Bucklo, J.), aff d, 348 F.3d 218, (7 th Cir. 2003). 6/ Indeed, [b]ecause of the secretive character of conspiracies, direct evidence is elusive, and hence the existence and the defendants participation can usually be established only by circumstantial evidence. United States v. Redwine, 715 F.2d 315, 319 (7 th Cir. 1983); see also Lindemann, 85 F.3d at 1238 (secretive nature of conspiracies one reason for conspirator exception to hearsay rule). 3. Requirements for Determining if a Person has Joined the Conspiracy A defendant joins a criminal conspiracy if he agrees with another person to one or more of the common objectives of the conspiracy; it is immaterial whether the defendant knows, has met or 6/ Even though the government need not prove the crime of conspiracy for the co-conspirator doctrine to apply, criminal conspiracy cases are helpful in stating the types of evidence that are sufficient to show conspiracy. If the government meets the higher standard for criminal conspiracy, a fortiorari, the evidentiary standard is met. 7

8 Case 1:08-cr Document 306 Filed 04/14/10 Page 8 of 91 has agreed with every co-conspirator. See United States v. Boucher, 796 F.2d 972, 975 (7 th Cir. 1986); United States v. Balistrieri, 779 F.2d 1191, 1225 (7 th Cir. 1985); see also Rodriguez, 975 F.2d at 411 (defendant must have intended to join and associate himself with the conspiracy s criminal design and purpose). The government need not prove, however, that a defendant knew each and every detail of the conspiracy or played more than a minor role in the conspiracy. United States v. Sims, 808 F. Supp. 620, 623 (N.D. Ill. 1992) (Alesia, J.). As the Supreme Court has said: A conspiracy may exist even if a conspirator does not agree to commit or facilitate each and every part of the substantive offense.... The partners in the criminal plan must agree to pursue the same criminal objective and may divide up the work, yet each is responsible for the acts of each other.... If conspirators have a plan which calls for some conspirators to perpetrate the crime and others to provide support, the supporters are as guilty as the perpetrators. Salinas v. United States, 522 U.S. 52, 63-4 (1997) (citations omitted). 7/ A defendant may be found to have participated in a conspiracy even if he joined or terminated his relationship with others at a different time than another defendant or co-conspirator. See United States v. Ramirez, 796 F.2d 212, 215 (7 th Cir. 1986); United States v. Noble, 754 F.2d 1324, 1329 (7th Cir.1985). 8/ A district court may consider the conduct, knowledge, and statements of the defendant and others in establishing participation in a conspiracy. A single act or conversation, for example, can suffice to connect the defendant to the conspiracy if that act leads to the reasonable inference of intent to 7/ See also United States v. Liefer, 778 F.2d 1236, 1247 n.9 (7 th Cir. 1985); United States v. Towers, 775 F.2d 184, 189 (7 th Cir. 1985); United States v. Morrow, 971 F. Supp. 1254, (N.D. Ill. 1997)(Alesia, J.). 8/ A defendant, even if not an agreeing member of a conspiracy, may nonetheless be found guilty of conspiracy if he knew of the conspiracy s existence at the time of his acts, and his acts knowingly aided and abetted the business of the conspiracy, see United States v. Scroggins, 939 F.2d 416, 421 (7 th Cir. 1991); Sims, 808 F. Supp. at 623 n.1, even if the defendant was not charged with aiding and abetting, see United States v. Kasvin, 757 F.2d 887, (7 th Cir.1985). 8

9 Case 1:08-cr Document 306 Filed 04/14/10 Page 9 of 91 participate in an unlawful enterprise. See, e.g., Sims, 808 F. Supp. at / Statements made during the course of and in furtherance of a conspiracy, even in its embryonic stages, are admissible against those who arrive late to join a going concern. United States v. Potts, 840 F.2d 368, 372 (7 th Cir. 1987). A co-conspirator who has become inactive in the scheme nevertheless is liable for his coconspirators further statements unless he openly disavows the conspiracy or reports it to the police. United States v. Feldman, 825 F.2d 124, 129 (7 th Cir. 1987). See also United States v. Andrus, 775 F.2d 825, 850 (7 th Cir. 1985). F. Statements Made in Furtherance of the Conspiracy In determining whether a statement was made in furtherance of the conspiracy, courts look for a reasonable basis upon which to conclude that the statement furthered the conspiracy s goals. United States v. Johnson, 200 F.3d 529, 533 (7 th Cir. 2000). Under the reasonable-basis standard, a statement may be susceptible to alternative interpretations and still be in furtherance of the conspiracy; the statement need not have been exclusively, or even primarily, made to further the conspiracy in order to be admissible under the co-conspirator exception. See, e.g., Johnson, 200 F.3d at 533 (citing United States v. Stephenson, 53 F.3d 836, 845 (7 th Cir. 1995)). The Seventh Circuit has found a wide range of statements to satisfy the in furtherance requirement. See, e.g., United States v. Cozzo, No. 02 CR 400, 2004 U.S. Dist. LEXIS 7391 (N.D. Ill. April 16, 2004) (Zagel, J.) (collecting cases). In general, a statement that is part of the information flow between conspirators intended to help each perform his role is admissible under Rule 801(d)(2)(E). United States v. Santos, 20 F.3d 280, 286 (7 th Cir. 1994) (quoting United States 9/ Similarly, efforts by an alleged co-conspirator to conceal a conspiracy may support an inference that he joined the conspiracy while it was still in operation. See Redwine; 715 F.2d at 321; United States v. Robertson, 659 F.2d 652, 657 (5 th Cir. 1981). 9

10 Case 1:08-cr Document 306 Filed 04/14/10 Page 10 of 91 v. Johnson, 927 F.2d 999, 1001 (7 th Cir. 1991)); accord, United States v. Gajo, 290 F.3d 922, 929 (7 th Cir. 2002). These include statements made: (1) to identify other members of the conspiracy and their roles, United States v. Roldan-Zapata, 916 F.2d 795, 803 (2d Cir. 1990); United States v. Magee, 821 F.2d 234, 244 (5 th Cir. 1987); (2) to recruit potential co-conspirators, United States v. Curry, 187 F.3d 762, 766 (7 th Cir. 1999); (3) to control damage to an ongoing conspiracy, United States v. Van Daal Wyk, 840 F.2d 494, 499 (7 th Cir. 1988); Kapp, 2003 U.S. Dist. LEXIS 3989, at *3; (4) to keep co-conspirators advised as to the progress of the conspiracy, Potts, 840 F.2d at 371; Kapp, 2003 U.S. Dist. LEXIS 3989, at *3; (5) to conceal the criminal objectives of the conspiracy, United States v. Kaden, 819 F.2d 813, 820 (7 th Cir. 1987); (6) to plan or to review a co-conspirator s exploits, United States v. Molt, 772 F.2d 366, (7 th Cir. 1985); or (7) as an assurance that a co-conspirator can be trusted to perform his role. United States v. Pallais, 921 F.2d 684, 688 (7 th Cir. 1990); Van Daal Wyck, 840 F.2d at 499. The Seventh Circuit has also said that [s]tatements made to keep co-conspirators informed about the progress of the conspiracy, to recruit others, or to control damage to the conspiracy are made in furtherance of the conspiracy. Stephenson, 53 F.3d at 845. Accord, United States v. Curtis, 37 F.3d 301, 307 (7 th Cir. 1994). 1. Statements Made to Execute the Conspiracy Statements made by co-conspirators to conduct the business of the conspiracy and to accomplish its goals are classic examples of statements made to conduct and further a conspiracy. Cox, 923 F.2d at 527. Statements such as these, which are intended to promote the conspiratorial objectives, should be admitted pursuant to Rule 801(D)(2)(E). 10/ Statements that prompt the 10/ United States v. Sinclair, 109 F.3d 1527, 1534 (10 th Cir. 1997); accord, United States v. Shores, 33 F.3d 438, 444 (4 th Cir. 1994). 10

11 Case 1:08-cr Document 306 Filed 04/14/10 Page 11 of 91 listener to act in a manner that facilitates the carrying out of the conspiracy are also made in furtherance of the conspiracy. 11/ Whether a particular statement tends to advance the objectives of the conspiracy or to induce the listener s assistance is determined by an examination of the context in which it is made. See Garlington v. O Leary, 879 F.2d 277, 284 (7 th Cir. 1989). 2. Statements Regarding the Conspiracy s Activities Statements describing the purpose, method, or criminality of the conspiracy, are made in furtherance of the conspiracy because co-conspirators make such statements to guide each other toward achievement of the objectives of the conspiracy. United States v. Ashman, 979 F.2d 469, 489 (7 th Cir. 1992). Similarly, statements that are part of the information flow between co-conspirators made in order to help each co-conspirator perform his role are in furtherance of the conspiracy. See, e.g., Godinez, 110 F.3d at 454; Garlington, 879 F.2d at ; Van Daal Wyk, 840 F.2d at 499. Statements to assure that a co-conspirator can be trusted to perform his role also satisfy the in furtherance requirement. See, e.g., United States v. Romo, 914 F.2d 889, 897 (7 th Cir. 1990); de Ortiz, 907 F.2d at (7 th Cir. 1990). 3. Statements to Recruit Co-conspirators Statements made to recruit potential members of the conspiracy are made in furtherance of the conspiracy. Curry, 187 F.3d at 766; Godinez, 110 F.3d at / 11/ United States v. Monus, 128 F.3d 376, 392 (6 th Cir. 1997); United States v. Simmons, 923 F.2d 934, 945 (2d Cir. 1991); United States v. Smith, 833 F.2d 213, 219 (10 th Cir. 1987). 12/ See also, e.g., United States v. Doerr, 886 F.2d 944, 951 (7 th Cir. 1989); Garlington, 879 F.2d at

12 Case 1:08-cr Document 306 Filed 04/14/10 Page 12 of Statements Regarding the Activities of Other Co-conspirators Designed to Inform or Reassure the Listener Statements made by co-conspirators to other individuals who participate in, or interact with, the conspiracy contribute to the conspiracy. See Van Daal Wyk, 840 F.2d at 499 (wholesaler instructed his courier not to deliver any additional quantities of cocaine to the defendant, a dealer). The exchange of information is the lifeblood of a conspiracy, as it is of any cooperative activity, legal or illegal. Even commenting on a failed operation is in furtherance of the conspiracy, because people learn from their mistakes. Even identification of a coconspirator by an informative nickname... is in furtherance of the conspiracy, because it helps to establish, communicate, and thus confirm the lines of command in the organization. Such statements are "part of the information flow between conspirators intended to help each perform his role," and no more is required to make them admissible. Pallais, 921 F.2d at 688. The same logic dictates that discussions concerning a conspiracy s successes are admissible as statements in furtherance of the conspiracy. See id.; Van Daal Wyk, 840 F.2d at 499. Statements intended to reassure the listener regarding the progress or stability of the conspiracy also further the conspiracy. United States v. Sophie, 900 F.2d 1064, 1073 (7 th Cir. 1990) (description of past drug deals). Likewise, statements made to reassure and calm the listener may further the conspiracy, see Garlington, 879 F.2d at 284 ; United States v. Molinaro, 877 F.2d 1341, (7 th Cir. 1989) (upholding admission of statements designed to iron out disputed details of the conspiracy and to control the damage apparently done to the conspiracy). 5. Statements Relating to the Progress and Past Accomplishments of the Conspiracy Statements made by co-conspirators concerning past exploits by members of the conspiracy are in furtherance of the conspiracy when made to assist in managing and updating other members of the conspiracy. Potts, 840 F.2d at 371; Molt, 772 F.2d at Similarly, statements regarding 12

13 Case 1:08-cr Document 306 Filed 04/14/10 Page 13 of 91 a co-conspirator s failure to fully accomplish the objective of the conspiracy are admissible as updates on the status of the conspiracy and how that status affected the future of the conspiracy. United States v. Doyle, 771 F.2d 250, 256 (7 th Cir. 1985). 6. Statements to Conceal the Criminal Objectives of the Conspiracy Finally, statements made to conceal the criminal objectives of the conspiracy are made in furtherance of the conspiracy where, as here, ongoing concealment is one of its purposes. See, e.g., United States v. Maloney, 71 F.3d 645, 660 (7 th Cir. 1995); Kaden, 819 F.2d at 820; United States v. Bouzanis, No. 00 CR 1065, 2003 U.S. Dist. LEXIS 16218, at *21 n.5 (N.D. Ill. Sept. 15, 2003) (Lefkow, J.). Avoiding detection by law enforcement officials clearly furthers the aims of a conspiracy. United States v. Troop, 890 F.2d 1393, 1404 (7 th Cir. 1989). Statements made to control damage to an ongoing conspiracy have also been found to have been made in furtherance of the conspiracy. See Stephenson, 53 F.3d at 845; Van Daal Wyk, 840 F.2d at 499. G. Alternative Bases for Admissibility of Statements The government believes that the statements of co-conspirators set forth in this proffer should be admitted as non-hearsay under the co-conspirator doctrine. There are alternative bases, however, for admission of many of the statements. These bases do not require a Rule 801(d)(2)(E) analysis. 1. Defendant s Own Statements A defendant s own admissions are admissible against him pursuant to Rule 801(d)(2)(A), without reliance on the co-conspirator statement rule. 13/ Maholias, 985 F.2d at 877. A defendant s 13/ Rule 801(d)(2)(A) provides in pertinent part that a statement is not hearsay if [t]he statement is offered against a party and is... the party s own statement, in either an individual or a representative capacity. 13

14 Case 1:08-cr Document 306 Filed 04/14/10 Page 14 of 91 own admissions, moreover, are relevant to establishing the factual predicates for the admission of co-conspirator statements against him. See, e.g., Godinez, 110 F.3d at 455; Potts, 840 F.2d at / 2. Statements by a Person Authorized by Defendant to Make the Statement or Statements Made by an Agent of the Defendant Pursuant to Rule 801(d)(2)(C), a statement made by a person specifically authorized to speak for the defendant is equivalent to an admission by the defendant. Further, pursuant to Rule 801(d)(2)(D), a statement made by an agent of the defendant is a vicarious admission of the defendant if the statement is made within the scope of the agency and during the course of the relationship. 3. Non-hearsay Statements The co-conspirator statement analysis also is not triggered when the relevant verbal declaration is not a statement within the meaning of Rule 801(a) and when it is not hearsay. This rule defines statement as an oral or written assertion or nonverbal conduct of a person, if it is intended by the person as an assertion. Thus, a statement that is incapable of verification, such as an order or a mere suggestion, is not hearsay and does not invoke a Rule 801(d)(2)(E) analysis. See, e.g., United States v. Tuchow, 768 F.2d 855, 868 n.18 (7 th Cir. 1985). Accordingly, statements by alleged co-conspirators may be admitted into evidence without establishing the Bourjaily factual predicates, but with corresponding limiting instructions, when such statements are offered simply to show, for example, the existence, 14/ Other sections of Rule 801(d)(2) provide alternative bases of admissibility that may apply. Rule 801(d)(2)(B), for example, provides for the admissibility of adopted statements. 14

15 Case 1:08-cr Document 306 Filed 04/14/10 Page 15 of 91 illegality, or nature and scope of the charged conspiracy. 15/ In addition, when words are being introduced as a verbal act, or as background for an alleged statement, they are not admitted for the truth of the matter asserted. For that reason, they are not hearsay, and may be admitted. See, e.g., United States v. Robinzine, 80 F.3d246, 252 (7 th Cir. 1996). III. THE GOVERNMENT S PROFFER REGARDING THE EXISTENCE OF A CONSPIRACY As charged in the Second Superseding Indictment, defendant Rod Blagojevich, Blagojevich s wife, defendant Robert Blagojevich, Christopher Kelly, Antoin Rezko, Alonzo Monk, Stuart Levine, Sheldon Pekin, Joseph Cari, Jacob Kiferbaum, William Cellini, John Harris, Deputy Governor A, 16/ Individual I, Advisor A, Advisor B, and others 17/ conspired to use the powers of the Office of the Governor of the State of Illinois to take and cause governmental actions in order to 15/ See, e.g., United States v. Herrera-Medina, 853 F.2d 564, (7 th Cir. 1988); Van Daal Wyk, 840 F.2d at ; Tuchow, 768 F.2d at In some cases, statements by an alleged co-conspirator will include a combination of declarations offered for the truth of the matters asserted and declarations offered for other non-hearsay purposes. 16/ Throughout this motion, the government will refer to uncharged individuals and to certain entities by labels instead of their identities. The government will use the same labels for these individuals and entities that were used in the Second Superseding Indictment. To avoid confusion, the government has identified additional people who were not referenced in the Second Superseding Indictment beginning with the designation Individual. Entities that were not in the Second Superseding Indictment have been given descriptive labels as well. The government will provide the true identity of the names of individuals and entities who are not disclosed in this motion to the Court and to counsel for the defendants. 17/ There are additional individuals that the government believes would properly be considered co-conspirators in the charged conspiracies or schemes that are not included on this list. The government is not seeking to introduce statements by those individuals pursuant to Rule 801(d)(2)(E), so the government has not designated those individuals as co-conspirators for purposes of this proffer. The government reserves the right to amend its list of co-conspirators, including to add additional co-conspirators, and simply provides the above list in furtherance of its proffer of evidence to demonstrate a conspiracy existed. 15

16 Case 1:08-cr Document 306 Filed 04/14/10 Page 16 of 91 obtain financial benefits for themselves and others, including campaign contributions for Rod Blagojevich, and employment for Rod Blagojevich and his wife. The government submits the following summary of evidence: 18/ A. Efforts To Obtain Personal Benefits for Blagojevich and Campaign Contributions In Exchange For State Action ( ) 1. Influence and Actions of Christopher Kelly and Antoin Rezko Rod Blagojevich was first elected Governor of the State of Illinois in November Christopher Kelly and Antoin Tony Rezko played important roles in assisting Blagojevich in this campaign. Kelly was part of Blagojevich s inner circle during the campaign and was one of the top fundraisers for Blagojevich. Kelly oversaw most aspects of fundraising for the campaign, including ensuring that other individuals met their fundraising goals. Rezko was also one of the top fundraisers for Blagojevich. After Blagojevich became Governor in January 2003, Kelly and Rezko continued to play important roles in fundraising for Blagojevich. In 2003 and 2004, Kelly and Rezko had the primary role in overseeing the efforts to raise money for Blagojevich. They were heavily involved in organizing the large annual fundraising events that Blagojevich held in the summers of 2003 and In that time frame, Blagojevich pushed Rezko and Kelly to raise funds in a variety of conversations. Kelly and Rezko also had significant influence over aspects of state government during the 18/ This summary is based on information contained in various interview reports, documents, and grand jury statements obtained or created during the investigation, as well as transcripts of recorded phone calls and meetings. Some of the communications described below took place through written means, and there were additional co-conspirator statements made in the form of s, faxes, written contracts (including drafts), calendars, and other written forms not all of which are described in detail below. 16

17 Case 1:08-cr Document 306 Filed 04/14/10 Page 17 of 91 transition period after Blagojevich won office and continuing after Blagojevich took office. Kelly and Rezko were part of the informal kitchen cabinet that Blagojevich used to make decisions, and had complete access to Blagojevich and/or Monk (Blagojevich s Chief of Staff during this period) to talk about any state issue they wished. Kelly and Rezko used their influence over state affairs. For example, Rezko and Kelly recommended and/or interviewed many of the people who were selected to top positions in Blagojevich s administration and were actively involved in the awarding of certain state contracts. Kelly and Rezko also exercised significant influence over the appointments Blagojevich made to state boards and commissions. Monk was the primary person responsible for overseeing the selection process for filling boards and commissions vacancies. Kelly and Rezko each recommended many candidates for various boards and commissions, and Monk gave their recommendations great weight. From what Blagojevich said about appointments to boards and commissions, Monk understood that Blagojevich viewed those appointments as an opportunity to reward big fundraisers or Blagojevich s supporters. Blagojevich consistently wanted to know who recommended a particular candidate for a board or commission slot. When Kelly and Rezko made their recommendations for people to be on boards and commissions, Monk knew that they were often rewarding people who had made contributions to Blagojevich or who were going to do so. Rezko and Kelly demonstrated over time that they had more interest in certain boards than others and particularly that they were interested in the boards that controlled money, including the pension boards like the Teachers Retirement System, the Illinois State Board of Investment, and the State University Retirement System. Rezko also had a significant interest in the appointments 17

18 Case 1:08-cr Document 306 Filed 04/14/10 Page 18 of 91 to the Illinois Health Facilities Planning Board. Blagojevich gave Kelly and Rezko significant deference for their picks on those types of boards. 2. Solicitation of Joseph Cari Joseph Cari was a lawyer with the law firm of Ungaretti & Harris and was also affiliated with a private equity firm called Healthpoint Capital ( Healthpoint ). Cari had been the national finance chair for the Al Gore presidential campaign in 2000 and had many fundraising contacts around the country. In approximately late Summer 2003, Cari had a conversation with David Wilhelm, who had previously been involved in Blagojevich s campaign for governor. Wilhelm asked Cari to meet Kelly. Wilhelm told Cari that Kelly and Rezko were two key people who were close to Blagojevich. Wilhelm asked Cari to talk to Kelly about the mechanics of setting up a national fundraising operation for Blagojevich. Shortly after the conversation with Wilhelm, Cari met with Kelly and Wilhelm. Cari discussed with Kelly what it would take to build a national fund-raising operation for Blagojevich. Shortly after meeting with Kelly, Cari had dinner with Stuart Levine, who was a member of a state pension board and an associate of Kelly and Rezko. Cari first met Levine in 2002 when Cari was obtaining funds from Levine s state pension board for Healthpoint and had kept in touch with Levine after that point. Levine was following up on Cari s meeting with Kelly and was gathering additional fundraising information. Levine told Cari the information would be shared with Rezko. Levine also told Cari that Rezko was helping Blagojevich fill State of Illinois board slots and that Levine owed Rezko for Rezko having helped get Levine on certain state boards. 18

19 Case 1:08-cr Document 306 Filed 04/14/10 Page 19 of 91 Not long after meeting with Levine, Cari agreed to assist in a fundraiser being held for Rod Blagojevich in New York City. On the morning of the fundraiser in October 2003, Cari flew to New York City with Rod Blagojevich, Kelly, Levine, and others. During the plane ride, Cari had a conversation with Rod Blagojevich. Rod Blagojevich stated he had aspirations beyond being governor and that fundraising was the key to political success. Rod Blagojevich stated that Rezko and Kelly were Blagojevich s point people in coordinating fundraising and helping Blagojevich s supporters. Blagojevich informed Cari that Blagojevich could award contracts, legal work, and investment banking to help with Blagojevich s fundraising. The conversation ended with Blagojevich stating that he wanted the dialogue with Cari about fundraising to continue and that Rezko and Kelly would follow up with Cari. At the fundraiser that evening, Cari had a conversation with Levine. Among other things, Levine informed Cari that there was a plan in place that Rezko and Kelly, on behalf of Blagojevich, would help pick lawyers, consultants, and others to get state business and then request campaign contributions from those who received State work. After the fundraiser, Cari met with Rezko at Rezko s offices in Chicago. Rezko informed Cari that Rezko was following up on the conversation that Cari had with Blagojevich regarding fundraising. Rezko informed Cari that Rezko had a hand in choosing law firms, consultants, and other state work and that Monk would assist with implementing those choices. Rezko informed Cari that the Blagojevich administration would be helpful to Cari s financial interests if Cari would agree to assist Blagojevich raise money on a national level. Cari declined Rezko s offer. After meeting with Rezko, Cari eventually met with Kelly in March Kelly informed Cari that Kelly was following up on the conversations Cari had with Blagojevich, Rezko, and 19

20 Case 1:08-cr Document 306 Filed 04/14/10 Page 20 of 91 Levine. Kelly, like Rezko, asked Cari to raise money for Blagojevich on a national level. When Cari declined the request, Kelly stated that Cari agreeing to help raise funds would be good for Cari s law firm and private equity firm and that Cari could have whatever work from the State that Cari wanted in exchange for Cari s help in raising funds for Blagojevich. Cari declined Kelly s offer. In addition to the above, Cari had a variety of conversations with Levine in which Levine reiterated statements related to Rezko controlling the disbursement of State money or work. 3. Attempts to Obtain Money or Campaign Contributions Through State Action Blagojevich, Rezko, Kelly, and Monk had conversations, individually and collectively, about how the four of them could make money from their control over the State of Illinois government. In those conversations, Blagojevich, Rezko, Kelly, and Monk discussed a number of specific ideas for making money, such as through operating businesses that would get state money in different ways or receiving fees from people who did business with the state. Blagojevich, Rezko, Kelly, and Monk did not expect to have to invest significant money in any of these deals; instead, they were simply looking to collect money from the deals in the form of a finder's fee or from revenue that might be generated from the deals. As a general matter, Rezko was the one who was trying to set up the money-making arrangements and Kelly and Rezko were the most knowledgeable about how the plans would work. Blagojevich and Monk would then use their power and authority in state government as needed to assist whatever plans Rezko and Kelly put in place. The conversations about making money from state action began before Blagojevich actually won the election in Kelly brought up the idea to Monk in 2002, when it seemed pretty certain that Blagojevich would win. In that conversation, Monk understood Kelly to suggest that Kelly, 20

21 Case 1:08-cr Document 306 Filed 04/14/10 Page 21 of 91 Monk, Blagojevich, and others could benefit if Blagojevich won the election. Kelly said that there was money to be made from Blagojevich being Governor and that the Republicans had been doing the same for a long time. There were occasions after Blagojevich became Governor that Blagojevich, Kelly, Monk, and Rezko all met to discuss their efforts to make money from state action. For example, the four men met in a conference room at the offices of one of Rezko s businesses in about mid to late During the meeting, Rezko led the discussion, standing at an easel or chalkboard and listed at least three or four different ideas or plans to make money being developed by Rezko that involved some kind of state action. At times, Kelly got up during the meeting and clarified or added to things that Rezko was saying. Blagojevich mostly listened during the meeting, but was engaged. As Rezko talked, he indicated how much money Blagojevich, Kelly, Rezko, and Monk could hope to make from the different ideas. The amounts that were associated with the different ideas were typically in the hundreds of thousands of dollars per deal, which would be evenly split four ways. At times, Blagojevich, Kelly, Rezko and Monk also talked individually about their efforts to make money in a variety of ways. Blagojevich, Kelly, Rezko, and Monk stopped talking about the ideas about making money directly from their control over the State at some point after they learned that Stuart Levine had been confronted by the FBI in the spring of 2004, as explained in more detail below. a Pension Obligation Bond Kickback One of the ways in which Blagojevich, Rezko, Kelly, and Monk tried to obtain money from their control over the State of Illinois was related to the State s re-financing of $10 billion in Pension 21

22 Case 1:08-cr Document 306 Filed 04/14/10 Page 22 of 91 Obligation Bonds ( POB ) in This was one of the money-making ideas that was discussed in meetings involving all four men. Blagojevich had the power to decide which bond firms would have roles in the POB offering. Illinois state administrators determined that there were a number of investment firms, including Bear Stearns, that were qualified to handle the largest share of the bond sales. Initially, state administrators planned to sell the POB bonds in three different waves, depending on the market conditions. Kelly and Rezko advocated to Monk that Bear Stearns should be chosen as the firm that would take the lead on the first round of bond sales, which would likely mean that Bear Stearns would make the most money of the firms working on the first round of sales. Monk initially understood that Kelly and Rezko were pushing Bear Stearns because either Bear Stearns would make a political contribution to Blagojevich or because Blagojevich, Kelly, Rezko, and Monk would make money if Bear Stearns were chosen as the lead. Monk went through the list of potential firms with Blagojevich, and told him that Kelly and Rezko wanted Bear Stearns to be the lead for the first round. Blagojevich decided that Bear Stearns would receive the lead role. Monk also talked with Rezko and Kelly about other firms that were looking to participate in the $10 billion POB deal. In addition to Bear Stearns, Rezko and Kelly also pushed in favor of other firms, including law firms, to have other roles in the POB deal. Monk understood that Kelly and Rezko were looking to reward investment firms and law firms that had contributed to Blagojevich or might be willing to contribute. Monk was also involved in discussions with Kelly and Blagojevich about the POB issuance on the day of the bond sale. On the day of the sale, state administrators suggested that the market conditions were so good that the State could issue all $10 billion in bonds that day. Blagojevich, 22

23 Case 1:08-cr Document 306 Filed 04/14/10 Page 23 of 91 Kelly, and Monk met with several other state administrators to decide whether to sell all the bonds that day. Monk understood that it would be good for Bear Stearns if the State did issue all $10 billion in bonds that day because of Bear Stearns s role as the lead underwriter for the first round. At one point during this meeting, Kelly spoke with Blagojevich separately from the group. Shortly after that, Blagojevich made the decision to issue all $10 billion of the bonds at once. Later that day, Kelly told Monk that Kelly had told Blagojevich when they were alone that letting Bear Stearns sell all $10 billion of the bonds would mean that Bear Stearns would make more money, and that there would be a benefit for the four of them, which Monk understood meant that Blagojevich, Kelly, Rezko, and Monk would make money if Blagojevich allowed the entire sale to go forward that day. After the bonds were issued, Kelly, Rezko, and Monk had further discussions about the money that they would make as a result of the POB deal. Rezko told Monk that Individual A, an associate of Rezko s, was putting money in a separate account that would later be turned over to Rezko. Rezko indicated to Monk that Individual A either had received or was going to receive money from Bear Stearns for acting as a consultant in relation to the POB deal. Rezko and/or Kelly told Monk that Individual A was going to give Rezko $500,000, which Monk understood was for the help that Rezko had provided to Bear Stearns and Individual A relating to the POB deal. In about 2004, Kelly told Monk that Kelly was pissed off at Rezko because Rezko needed $100,000 and took it from the Individual A account. Kelly indicated that he was upset because he thought Rezko s withdrawal of the money would somehow alert the authorities to the existence of the account, so Kelly said he told Rezko to put the money back. Kelly was not concerned that Rezko was taking money that belonged to Blagojevich, Monk, Rezko, and Kelly, but that Rezko s taking 23

24 Case 1:08-cr Document 306 Filed 04/14/10 Page 24 of 91 of the money might alert the authorities. Kelly mentioned on more than one occasion to Monk that he was upset with Rezko over this matter. Kelly subsequently indicated to Monk that Rezko put the money back in the account. Financial records indicate that on or about September 24, 2003, Individual A received approximately $809,000 from Bear Stearns as a finder s fee in connection with Individual A s work on the POB offering. Rezko then arranged for Individual A to make a $600,000 transfer of funds to Joseph Aramanda, a long-time friend and associate of Rezko s, on or about October 2, 2003, pursuant to a loan agreement between Individual A and Aramanda that Rezko had arranged to draw up. At Rezko s direction, Aramanda then transferred approximately $450,00 of the $600,000 he received from Individual A to various individuals and entities chosen by Rezko. Aramanda ultimately paid Individual A back in June 2004, shortly after Rezko arranged for Aramanda to receive another loan of approximately $600,000 from another associate of Rezko s who did business with the State of Illinois. b. Teacher s Retirement System Kickbacks and Extortions Blagojevich, Kelly, Rezko and Monk also had discussions about how they could make money through their influence and control over the running of the state pension boards, particularly the Teacher s Retirement System of Illinois ( TRS ). TRS is a public pension plan created by Illinois law for the purpose of providing pension, survivor, and disability benefits for teachers and administrators employed in Illinois public schools except in the City of Chicago. The activities of TRS are directed by a Board of Trustees, which is made up of trustees appointed by the Governor as well as trustees elected by the beneficiaries of the pension plan. 24

25 Case 1:08-cr Document 306 Filed 04/14/10 Page 25 of 91 Rezko and Kelly were able to obtain significant influence over the affairs of TRS through their relationship with Stuart Levine and his associates. Levine was a TRS trustee when Blagojevich took office, and was re-appointed to the TRS Board in May 2004 by Blagojevich at the urging of Rezko and Kelly. Rezko and Kelly used their relationship with Levine in an effort to make millions of dollars in kickbacks from people doing business with TRS and other state pension boards and to obtain campaign contributions for Blagojevich. The conspirators planned to obtain the kickbacks in this scheme from the finder s fees that were paid by investment firms seeking TRS investments Levine arranged with the individuals that were going to receive those fees that they would give Levine a share in exchange for his help at TRS. In turn, Levine agreed to share those fees with Rezko and Kelly in exchange for the use of their influence over state matters on his behalf. i. The Consolidation of the Pension Boards Levine and William Cellini, who had significant influence over TRS trustees, had effective control over the TRS Board prior to Blagojevich becoming governor. In approximately the spring of 2003, that control was threatened by the possibility that TRS would be consolidated with other state pension boards. In an effort to prevent that, Cellini told Rezko and Kelly that Cellini and Levine would use their influence on the TRS Board to help investment firms that Rezko or Kelly recommended receive investments from TRS, if, in exchange, Rezko and Kelly would use their influence to prevent consolidation. Levine understood from what Cellini said that Rezko and Kelly would seek to help investment firms that had or would make political contributions to Blagojevich. Cellini told Levine that Rezko and Kelly agreed to this arrangement. On April 12, 2004, law enforcement agents intercepted Levine talking with an associate of Cellini s about this arrangement 25